G8 continues its expansion push

G8 Education is back to all-time highs on news of further expansion to Australian education centres.

GEM has announced the acquisition of 63 new centres from a variety of vendors, taking its total centre portfolio to 296.

The settlement price is approximately $104.7 million, which GEM believes equates to four times the forecasted EBIT of CY14 of $26 million. Having seen GEM report an NPAT of $15.7 million in the first half of 2013, expectations are high for the full year numbers when they are released on February 17.

GEM’s funding plans for the acquisition will be divided between existing cash reserves and debt with a settlement date of April 30. This deal will see GEM being able to house 21,792 early learning and preschool students per day, with the new centres adding 4254 extra positions.

With dual-income families becoming the norm, demand for early learning centres is only expected to increase and this is something GEM is well aware of, which is why it is investing heavily now in centre numbers. If, come February 17, the NPAT is aligning with this social trend, today’s record high may be replaced with another record.

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